Neutrality would boost Netflix in SA - TechCentral

Neutrality would boost Netflix in SA

Netflix will be launched in South Africa in the coming months

Netflix will be launched in South Africa in the coming months

A local network neutrality policy could boost the market dominance of international streaming providers such as Netflix, says an expert.

Net neutrality is the concept of treating all Web traffic equally. It further involves website owners and consumers not having to pay extra for a fast lane on the Internet.

The South African government has previously highlighted the importance of an open, equitable Internet as part of a review of national information and communications technology (ICT) policy.

“Everything has to be done at a policy level to ensure that a new digital divide is not created,” the department of telecommunications & postal service’s Joe Mjwara said in parliament earlier this year.

But Denmark-based research firm Strand Consult has found that an equitable Internet has had unintended consequences.

“We find in countries with hard net neutrality rules that Netflix maintains a top position as a most favoured app,” said Strand Consult vice-president Roslyn Layton. “No local or other competitor threatens their position. Even companies that try to zero-rate their video app don’t touch Netflix’s dominance.”

Netflix is intent on expanding its market and rumours are circulating that the company will officially enter South Africa next year.

Local players such as Times Media Group’s Vidi, Naspers’ ShowMax and MTN’s FrontRow have all launched streaming services in a bid to preempt a Netflix launch in South Africa.

Last month, Hong Kong firm PCCW also launched a streaming product dubbed ONTAPtv.com in South Africa while Orange Horizons has previously revealed that it plans to launch a video on demand service in 2016.

Fast Internet lanes, though, could be of benefit to smaller video-on-demand players such as Vidi, ShowMax, FrontRow and ONTAPtv, said Strand Consult. “Theoretically a fast lane, if it existed, would be of greatest benefit to the small start-up,” said Layton.

“If you want to compete with Netflix with 65m customers in 50 countries, there is no way a startup can invest in such a distribution system — especially the cost of licensing the content,” said Layton.

“But if all a start-up would have to do is pay for a better, faster carriage, then it could compete with Netflix. It’s counterintuitive, but so it is,” she added.

In January, Netflix said that it planned to expand its global reach by over 150 countries in the next two years.

Outside of the US, Netflix has moved into markets such as Australia while reports have indicated that Hong Kong, Singapore, South Korea and Taiwan are next on its radar.  — Fin24

10 Comments

  1. “Strand Consult vice-president Roslyn Layton” – comes from Europe and has no idea of the economics of media in SA.. Take this rubbish down… it’s simply wrong

  2. Greg Mahlknecht on

    This article is all over the place. In one paragraph it says the main problems are “licensing the content” and not being able to compete with Netflix’s “distribution system”, and the next one it says all it needs to do it “pay for a better, faster carriage” – ie. the distribution system. And where did the concern of the licensing costs go? Are there a few missing paragraphs, as this makes no sense.

    What WOULD happen if we got net neutrality here, is that cheap uncapped ADSL would cease to exist, and the more expensive business-class uncapped would go up – in effect killing consumer uncapped and pushing up all prices. Shaping is a valuable tool and has been instrumental in pushing down internet prices in South Africa.

  3. I don’t even bother with standard uncapped anymore. I Buy 100GB per month and have a 00:00-06:00 “uncapped” add-on. Works like a bomb, I don’t typically even get through my 100GB and I stream a lot. Kodi and such, so that I don’t have to pay for a rubbish dstv subscription.

  4. Jimmy Knebworth on

    This content from Fin24 is not always the best – it tends to be very choppy and erratic.

  5. Vusumuzi Sibiya on

    >>Netflix is intent on expanding its market and rumours are circulating that the company will officially enter South Africa next year.

    >>Local players such as Times Media Group’s Vidi, Naspers’ ShowMax and MTN’s FrontRow have all launched streaming services in a bid to preempt a Netflix launch in South Africa.

    What these local players should be doing is ascertaining what the existing Netflix customer base is in SA first –

    1)They need to all agree to come up with some sort of “amnesty offer” to all South Africans cleverly or illegally (whatever) subscribed to Netflix; to move them over to their offerings and pay less than what they are currently paying to get Netflix.

    2)They need to come up with a business plan that will win over the SA mass market to their particular VoD service; and this is what will certainly set them apart from a Netflix because the higher market segment is the one most likely to be Netflix customers if they don’t take up an “amnesty offer”.

    I don’t see any of the local players being able to compete with a Netflix for the higher segments of the local market base because that would be an insurmountable mountain to climb of the equivalent of trying to launch your own YouTube…

    …shaping and zero rating of data can obviously help; but what’s good and works for the goose – will no doubt also benefit a Netflix; and there would obviously be a local telco, just waiting and ready to pounce on clinching a deal with Netflix.

  6. “If you want to compete with Netflix with 65m customers in 50 countries, there is no way a startup can invest in such a distribution system — especially the cost of licensing the content,” said Layton.

    “But if all a start-up would have to do is pay for a better, faster carriage, then it could compete with Netflix. It’s counterintuitive, but so it is,” she added.”

    No, it’s counter-intuitive because it’s nonsense. Licensing costs don’t disappear if you pay for faster carriage.

    The article is complete nonsense. Net-neutrality in South Africa in it’s purest form would stop ISPs from prioritising any traffic. That would mean that prices for “uncapped” accounts would go through the roof.

    The fact is that Netflix is a market leader for streaming video, so it would hurt any ISP to de-prioritise Netflix traffic… consumers would vote with their wallets and move to an alternative ISP with more liberal policies. This is very different from what is happening in the USA where many broadband subscribers are customers of the cable TV companies like Comcast. These cable companies are direct competitors of Netflix.

    So far in SA, there are no ISPs that are also content providers (except maybe MTN)… so I think the net neutrality argument is a little different.

  7. Surely we need more bandwidth to stream or download whatever we want, whenever we want? – That is a conversation i am interested in. Nobody should have the right to decide who gets priority over who on the net. It is one of the basic ideas behind the net. Otherwise it’s a slippery slope to censorship.

  8. Andrew Fraser on

    That’s true, to an extent. And that extent is your willingness to pay for it. Most ISPs offer a contended service in order to make it affordable and, in most cases these contended services offer sufficient bandwidth for users. But if one user floods the connection with a particular type of service so that it negatively impacts other users, the system fails. For this reason ISPs apply shaping to the various types of traffic – decreasing the priority of some high bandwidth protocols (e.g. P2P traffic) and prioritising others (e.g. web browsing).
    As a customer, if you’re not happy with that, then you can purchase unshaped bandwidth – but it’ll cost more. Enforcing pure net neutrality would force the ISPs to charge everyone for unshaped bandwidth whether they needed it or not, and forcing prices up.

  9. Thanks – I didn’t know that was how it worked…So I just upgraded my ADSL to 10mbps – guessing i can ask Telkom about my account, and whether it is shaped or unshaped? Is the cost difference massive?

  10. Andrew Fraser on

    You should be able to see the difference on Telkom’s website. Chances are that you have a shaped account as it is the most cost effective. All of the consumer-focused uncapped accounts on offer are shaped as far as I’m aware, and unless you are gaming (and require very low latency) or are sharing huge amounts of data via p2p protocols like bittorrent you probably wouldn’t notice the difference.

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